Strike could cost BA more than £300m

British Airways could lose at least £300m in lost profits and damage to its reputation if cabin crew walk out for all three planned strikes, City analysts have calculated.

Gert Zonneveld, a transport analyst at Panmure Gordon, said each of the three proposed strikes would cost the airline around £50m, but there could be a similar amount of reputational damage as passengers stopped booking tickets or gave up on the airline altogether. "I would have thought nobody is going to book BA for the next three to four weeks," he said. "Once the strike's over, many will return, but some will switch to other airlines and may stick with them."

Together, the estimated costs represent almost half of BA's consensus forecasts profits of £655m pre-tax for the full year.

Mr Zonneveld said his calculations on lost profits were based on estimates that BA earned an average £20m a day in revenues, but grounding planes meant it would not incur £8m-£10m a day of costs, notably for fuel. The disruption caused by industrial action also affects the first day of flying afterwards, raising the cost to more than £15m for each strike day.

Chris Avery, aviation analyst at JP Morgan, said that, in the past, each strike day had cost BA "somewhere in the region of £20m to £30m", but stressed precise calculations were difficult.

BA shares fell 7¾ to 528¾p after the carrier, which flies 77,000 people a day, cancelled 1,300 flights - 950 from Heathrow and 350 from Gatwick - for Tuesday and Wednesday next week.

Industry observers believe the move was a calculated risk by chief executive Willie Walsh to focus minds on the damage the strike is causing and the need to prevent industrial action spilling over into a second week.

One said: "There's a big difference between calling a strike and going on one. He's pulled the flights to focus minds. With the move to Terminal Five in 2008, he's playing a long game. He's prepared to have a fight now to prevent a bigger one later."

Mr Walsh, who had regular talks yesterday with Jack Dromey, the Transport and General Workers' Union deputy general secretary, stressed "our door remains open to the T&G".

Andy Cook, who was human resources director at Gate Gourmet during the walkout in summer 2005, said BA was still suffering from all the "legacy agreements" over working practices rooted in its days as a nationalised carrier.

Mr Cook, now managing director of human resources consultancy Marshall James, said previous management at BA had focused on "getting from one day to the next without disruption rather than take a long-term view. They have shied away from tackling big issues head-on".

He believed that Mr Walsh found himself in "a very tough situation. There's been an overwhelming vote in favour of a strike from a workforce not known for being militant. They are clearly sending a message".